FE Editorial: The bank is closed
Third, what will be done about opening up entry into banking? Indian customers of banking services today have three bad choices. The PSU banks do not know how to deliver good services to customers. The foreign banks have been prevented from setting up adequate distribution. This leaves just a handful of choices such as ICICI Bank, Axis Bank, HDFC Bank. These banks are faltering on many aspects of customer service: precisely because they face no competition. In every other walk of life in India, competition has come about and the benefits are visible. Would RBI now allow a private equity fund to put down Rs 100 crore in equity capital and start a bank? Fourth, the most important way to rapidly get high quality capabilities into Indian banking remains foreign banks. All foreign banks, put together, are permitted to open 18 branches a year. Removing this licensing requirement remains the most rapid way to improve the quality of banking services obtained by citizens. How and when will foreign banks be able to open branches in India based purely on commercial considerations, without distortions caused by the government? The reciprocity argument, often given by Indian private bankers, is not the point. Even if other countries are silly enough to stop Indian banks from opening branches, we should be smart enough to be more open.
Be the first to comment.